ICSTIS limbers up to issue updated Code

Premium rate telephone line regulator the Independent Committee for the Supervision of Telephone Information Services is planning an updated, 11th version of its Code of Practice. Unlike the CAP Code, for example, breach of the ICSTIS Code can lead to six figure fines, so it’s worth wising up with Anna Montes.

Playing catch up with the ICSTIS Code of Practice

In August, Ofcom approved an emergency amendment to the ICSTIS Code of Practice (Tenth Edition), which has now come into effect. This new Tenth version of the Code came into force from 15 September 2005. The amendment is aimed at slowing down the flow of money between phone networks and those running premium rate services, so that dishonest and fraudulent traders are deterred from entering the telecoms industry in the belief they can make quick profits from scams. The public and the industry have become all too aware of the reality of scam promotions on mobile in recent years.

But that is not all as far as the ICSTIS Code is concerned…..

An Eleventh edition of the ICSTIS Code of Practice is also currently a matter for debate. ICSTIS has been consulting the industry on a proposed new version of the Code and this consultation period closed last week on 23 September 2005. It is anticipated that the new code will not come into force before Spring 2006. The proposed new version follows recent in-depth reviews of ICSTIS' existing rules and aims to ensure that consumers are protected in the light of technological change and an increase in the volume and types of premium rate subscription services that are available nowadays.

The new version of the code can be found at – [insert website reference]. The main proposed amendments can be summarised as follows:

1. Who is a Network Operator?

The Code contains a new definition of what constitutes a Network Operator (NO) to ensure all appropriate bodies conduct proper due diligence on service providers and can bar access to services and withhold revenue where necessary. Network Operators will be considered all entities who require approval under Condition 11 of the General Conditions of Entitlement issued by Ofcom (such as those providing Publicly Available Telephone Services) and have a turnover exceeding £40 million, or those that have a direct network connection with such a company.

2. Does the Code distinguish between large and small service providers?

According to 1.3, the Code applies to all providers of Premium Rate Services (PRS), regardless of the likelihood of consumer harm arising. For example, arrangements with well known blue chip brand name service providers (SP) are dealt with in the same way as arrangements with higher risk SPs (such as smaller SPs providing SMS promotions). The result is that provisions such as payment terms of 30 days will apply to arrangements with all SPs even though there is little or no risk of consumer harm when dealing with large brand name SPs.

3. Additional administrative obligations on NOs

NOs are subject to a number of onerous obligations under the Code. Not only is the NO required to provide details about itself, i.e. evidence that it meets the criteria to be classified as an NO, but it is now also required to assume certain responsibilities in relation to the SPs operating on its network. This provision marks the cornerstone of the Code and should be in the forefront of the minds of all who are responsible for bringing on new SPs and maintaining relationships with existing SPs.

In particular, the NO is now required to take all reasonable steps to ensure that the details provided by the SPs are accurate and it must also take reasonable measures to satisfy itself that the SPs are complying with the Code. Even thought we do not yet have any clarification on what taking 'reasonable measures' entails, these requirements are likely to require some level of on-going monitoring of services using numbers/codes allocated by the NO. As part of NOs' responsibility in protecting consumers, NOs shall not make payments to SPs for at least 30 days after calls have been made.

In terms of sanctions, NOs are responsible for any shortfall in payment of SP fines, administrative charges or shortfalls as a result of an NO's failure to comply with an ICSTIS direction or the 30-day rule.

Where an NO has failed to meet its obligations, the new Code, at section 9, allows ICSTIS to impose sanctions directly on the NO.

4. Information Providers (IP)

In certain circumstances, ICSTIS may now pursue processes directly against IPs

5. General consumer protection driven provisions

There are a number of protective provisions that are designed to stop the consumer being misled and/or 'harmed'. Under the 10th edition, SPs must protect consumers from harmful or offensive material. Under the new Code, the inclusion of the word 'distress' extends the scope of this obligation. Similarly, prior permission is required for internet dialler services. Also, in order to reduce the level of unauthorised use by minors, ICSTIS is currently consulting on the introduction of an age verification process for these services. Another example of a measure to avoid the consumer being misled is that SPs must provide the "likely charge" for calls, which should cover the higher origination costs charged by some originating NOs for calls to PRS.

6. Promotions

More specifically, in the context of promotions, whether during advertising time or a TV programme, where costs can exceed £2.00 spoken pricing information must be provided in the form of a voiceover. ICSTIS in its consultation document has said that in dealing with applications for SMS prior permissions it has resisted the option of being prescriptive in setting out font sizes, colours, pricing etc. This approach should be contrasted with the approach of the mobile operators who in July updated their Code to be very prescriptive on font size etc.

The direct contact details of the relevant SP or the IP must be provided so that the consumer can contact the SP or the IP without using PRS or otherwise having to incur unreasonable expense. The question of whether the use of a 087 number would be considered unreasonable is yet to be answered.

The treatment of "buy one get one free" offers has now been brought in line with the relating provisions of the CAP Code. Such offers will be allowed provided that the second premium rate product or service is of at least an equal value to the first and is supplied at no extra charge.

7. Live services

Prior permission will not be required for all live services. This is on the basis that ICSTIS sees little point on imposing a prior permission requirement on live services that carry no greater risk than some non-live services. As such, the ICSTIS prior permission requirement is applicable for all live services subject to a published list of specified exceptions (e.g., technical support services and other services identified by ICSTIS as low risk).

ICSTIS currently operates a prior permission regime on all premium rate text chat services and directory enquiry services. In relation to text chat, the requirement for prior permission will be removed on the basis that specific requirements contained in prior permission certificates, such as the age restriction, will be contained in the Code. ICSTIS is proposing to remove the prior permission requirement on the same basis.

The Code will state that to participate in a chat service the user must be authorised and be 18. However, non adult text chat services can be offered to 16-17 age groups, provided advertising for these services is not targeted at under 16s. ICSTIS is also proposing that for MMS and SMS services the STOP command must be available to all users.

SPs providing virtual chat and SMS and MMS chat services must pay reasonable and valid claims for refunds. This is on the basis that most users who complain are seeking a refund of money spent in taking part in the service.

8. Pay for product services

ICSTIS considers pay for product services to be those where the product/service is delivered either to a geographic address or by electronic means (e.g., ringtone download) and for which the call must be completed before the product/service will be delivered. The new Code separates subscription services and pay for product services (pay for product services do not include products received as part of a subscription service). The pay for product section only applies to products bought as a single purchase, which would include all physical and electronic content such as an information alert, video, ringtone. All products bought under a subscription are dealt with elsewhere in the Code.

If a pay for product service can cost more than £5 the SP must keep records of the names and dispatch addresses of callers for a minimum of 6 months and the service must require an active confirmation from callers that they accept that their personal and delivery details will be retained and made available in the case of a claim for unauthorised use.

9. Procedures and sanctions

IP

Where a Code breach has been caused by an IP who accepts responsibility for the service and full responsibility for sanctions levied, ICSTIS can deal directly with the IP. However, the SP will remain responsible for compliance if the IP fails to comply with any sanction imposed by ICSTIS. Where the ICSTIS Committee imposes a bar on services, ICSTIS will look to the SP to comply with the service bar direction.

Emergency Procedure (EP)

The ICSTIS Committee must give approval before the Secretariat can invoke an EP. In cases where the Secretariat has Committee approval for an EP and, within 10 days after the EP is invoked, other cases with substantially the same characteristics come to light, the Secretariat need not seek further approval from the ICSTIS Committee for those other similar cases. This means that the Secretariat in specific circumstances is empowered to invoke the EP without further Committee approval.

In some cases an SP may be able to rectify breaches immediately where a service is the subject of an EP. If an SP can take steps to make the service the subject of EP compliant with the Code then it should be possible for the SP, with the agreement of the ICSTIS Committee, to operate the amended service pending the outcome of the investigation. This would not restrict the Committee from imposing a sanction. ICSTIS is not proposing any Code provision to this effect at this stage, but is seeking views on its feasibility and practicality.

Refund

Where a refund is ordered as a sanction against an SP and if directed by ICSTIS, terminating NOs should make revenue withheld by them available to consumers for three months after adjudication. The retention obligation of the NO shall cease three months after the adjudication and any time period for appeal to the Independent Appeals Body or the conclusion of such appeal or, if sooner, when the retention has been fully expended.

Review

Reviews are informal and require no legal representation. On reasonable grounds, ICSTIS may review determinations made in respect of applications for prior permission and adjudications and/or sanctions. An SP or applicant for prior permission may request such a review.

Appeals

The current ICSTIS proposal is to bring the grounds for appeal against oral hearings involving SPs and adjudications involving NOs in line with general public law procedure. Appeals may be made to the Independent Appeals Body on the following grounds:

the disputed decision was based on error or fact;

the disputed decision was wrong in law;

ICSTIS exercised its discretion irrationally in reaching its decision.